All Forum Posts by: Martin Min

Hi，Michael, thanks for this analysis. The reason i am asking is because i often saw messages mentioning cash flow rate. I understand that the two options have different pros and cons，so cash flow is just one factor that should be considered. One major diff of the two may be that low down payment may be a lot risker.

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When talking about cash flow, I feel it is directly impacted by the down payment amount when purchasing the property.With a minimal down payment, the cash flow will be minimal, or even negative; on the other hand, with a big down, for instance, 50%, the cash flow may be big. I read that usually 8% cash flow is something that's desired; otherwise, the property investment may not be good. So we may end up with two choices:

1. high down payment, high cash flow

2. low down payment, low cash flow

In case 2, if I put my money in some other properties or investment, even though the cash flow on this property may not be good, I can end up with multiple investments. In such a case, low cash flow may be a good thing. Is my understanding correct? Should we always pursue high cash flow rate?

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Hi，Jason， you are right with the low return，and that is why i am asking here. You also said that “i would keep what you are doing”. In this scenario, what's the advantage of doing that?

Originally posted by @Jason D.:

I think the most obvious point to make is that your cash flow isnt what it seems.....

Theres no accounting for vacancy, maintenance, or capex.

Your return on equity is very low, so you are losing a ton in opportunity cost.

That being said, it depends on what you would do with the money if you sold. If you would simply buy more low return properties, I would keep doing what you're doing.

If your intention would be to scale, possibly in a different market, I would sell in a heartbeat. You could make twice the cashflow (or more) in most other areas of the country with the equity you have tied up.

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Hi，Brian:

Yes，i also paid principles，which i should included in caculating the cash flow. Thank you for pointing this out.

Originally posted by @Brian Spohr:

I think it would be prudent of you to also account for capital expenditures, which would cut into the cash flow. You identify an interest expense, so can I assume that no principal is being paid down? Also something to eventually account for.

You definitely achieved some good appreciation out of these in that time, assuming they sell at these prices. In general, I think you can find better investments elsewhere.

Brian Spohr
Double Crown Realty
DRE #02081921

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Are you suggesting selling now is a better option if i can reinvest the gain well?

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Hi，Jacob: what do you mean by “16k in yearly income would take about 25 years to break even if you held on to them rather than selling them. ” would you please be more specific? Thanks.

Originally posted by @Jacob Villalobos:

About 400K in equity-+ (don't forget about taxes)

16k in yearly income would take about 25 years to break even if you held on to them rather than selling them.

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Yes. Bjorik，both have appreciated some，though the values went down about 10% compared to the top last year. I am thinking abouy selling them and buy in texas. But it looks like texas prices are also in multle year highs.

Originally posted by @Bjorik Mutize:

Wow, San Jose. It seems as if you got some good appreciation for both? And that's the cash flow you are getting after your debt service?

What would you do if you were to sell one or both?

If this is truly what you expect for sales prices i would say consider to sell and take your profits to a market where you get more bang for your buck.

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Yes，Brian，if the market does not drop or even crash，it may be better to keep it. But i am just a little nervous about the market direction.

Also，by the numbers i gave，the two rentals are already positive cash flow. Right?

Originally posted by @Brian Larson:

I’d keep it. Selling seems short-sighted in a market like San Jose given the overall city market should rise throughout the next decade with the development from tech firms and downtown development and support from groups like the Knight Foundation.

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Hello, BP community, I am currently renting out two properties in San Jose, as follows:

1: Town house, 450K purchase in 2016, currently sale price: $600K.

Expenses:

property tax: $6891.68

interest: $16009.17;

Insurance: $695

Repair: $400

Rents: $2500 * 12 = $30K

The rent just covers the expenses, with a $6000 positive cash flow

2. SFH, 650K purchase price in 2017, and current sale price: $870K

Expenses:

property tax: $9226.2

interest: $19022.42;

Insurance: $617

Repair: $300

Rents: $3400 * 12 = $40800

The cash flow of this is nearly $10K.

I am thinking about whether I should sell them for a profit. Or it makes more sense to continue renting.

I am almost a newbie and any thoughts or suggestions would be highly appreciated!

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All Forum Posts by: Martin Min

Martin Min has started 2 posts and replied 9 times.

Post: How to understand cash flow?

Post: How to understand cash flow?

Post: Should I sell or continue to rent out?

Post: Should I sell or continue to rent out?

Post: Should I sell or continue to rent out?

Post: Should I sell or continue to rent out?

Post: Should I sell or continue to rent out?

Post: Should I sell or continue to rent out?

Post: Should I sell or continue to rent out?